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Accra Limited, a manufacturer of baby products, is headquartered in Charlottetown, Prince Edward Island. For the scal year ended November 30, 2021, Accra Limited sold
Accra Limited, a manufacturer of baby products, is headquartered in Charlottetown, Prince Edward Island. For the scal year ended November 30, 2021, Accra Limited sold 50,000 packages of baby monitors. Each package consists of 2 baby monitors. The full cost of one package of baby monitors is $70. For each package of baby monitors, the following cost information applies: Direct material cost $20.50 Direct labour cost $14.50 Variable manufacturing overhead cost $13.00 Fixed manufacturing overhead costs for the 50,000 packages of baby monitors sold total $600,000. This pertains to renting a piece of equipment which produces baby monitors. This is the only purpose of the machine; there are no other possible uses for it. General allocated overhead total $500,000. Cairo Limited has submitted an offer to Accra Limited to provide similar quality baby monitors at $62 per package of 2 baby monitors. Required: (a) Would Accra Limited be better off buying baby monitors from Cairo Limited, or making them? Prepare a complete analysis for a production volume of 50,000 baby monitor packages (100,000 baby monitors). (15 marks) (b) At what production volume would Accra Limited be indifferent to either buy or make
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